The advent of Ola and Uber has changed the way urban India travels and dethroned the monopoly of taxis and autos.

When it comes to traveling by cab, people say, Hey! Book an Ola or Uber; they are less expensive than the autos. In the pre cab aggregator era, a customer had to contact a cab agency which would send you a car and charge you at usurious rates.

New strategies

Ola, a very Indian company, kicked off in December 2010, while its American cousin Uber arrived in India in August 2013. Both of these are online cab aggregators and regard themselves as technology companies. They have brought about a disruptive but welcome change in how we travel. Travel is a lot lighter on the purse thanks to penetrative pricing.

Initially, the booking was over the phone, and involved a transaction cost to be paid to the call centre. Then came the Apps, which eliminated operation costs and phoning time. Soon you could schedule your ride, meaning, ‘book now and travel later’. Incidentally, Ola Corporate allows employees book his cab and travel at employer’s cost. All of them give the rider an estimate of how much it would cost him to go to his destination.

And then in quick succession came a variety of features, good and bad.

Charges were based not just for the distance you traveled but also for the time the cab took to reach your destination. This charge-for-time was followed by surge pricing, a practice of charging more when vehicles were in short supply. The argument was that this would help demand meet supply. Then came the game changer. Why let only one person travel in a cab? Why not allow strangers as co-passengers. Enter ‘Share’ or ‘Pool.’ This brought down the costs significantly and made it cheaper than autos. It also saved a lot of petrol for the economy.

The drivers own the Uber and Ola cabs. They are ‘partners’ not employees of the cab aggregating company. The aggregators merely provide them with technology and identify potential customers in return for a fee. This way the company claims it is just a technology company.

The marvel of GPS and of ‘Cashless.’

The marvel called GPS has made things easy for both drivers and commuters. It helps track the cab on its way to the pick up point, get an estimated time of arrival for pick up, track location while the trip is in progress and raise the invoice of the ride on completion. Some have installed panic button on the App, which can alert two trusted numbers. In some cases, panic buttons are inside the car as well.

From calling up a cab service provider to using an App we have indeed come a long way. All you need is a smartphone with an Internet connection and the App to book a cab. The App, GPS enabled, searches for a driver, gives you his contact, and the cab arrives in a few minutes and off you are to your destination. You end up paying only Rs.80, to travel 5 kilometres. An auto would fleece you for Rs.150. Use the services in the airport, and you will pay less than 50 per cent of what you would pay pre-paid taxis. In some cases, the savings is an incredible 70 per cent.

Next is the ‘shared’ facility. You share your ride with a rider who travels in the same direction as yours. At times this has also been a disaster. Since a cab share can pick another person within a radius of 4km from where you are, you could end up traveling longer than what is warranted. Some aggregators now offer point to point, which means that only those riders who are en route can jump into your journey. Ola Pass shares are turning out to be cheaper than Ola Share. They do not have surge pricing.

Ola has an Ola Play, which enables the user to surf with their smartphone, help play pre-buffered HD content and get personalized updates. The Ola app syncs with the users account and allows them to use these services.

E-wallets have been in vogue with Uber and Ola. Ola uses Ola Money, a payment gateway to make its rides cashless. Just like other e-wallets, one has to transfer the amount shown on the app. On completion of a trip, Ola Money is deducted. Uber offers payment through Paytm Wallet. They have very recently tied up with JioMoney for effecting such payments. Both Uber and Ola allow payment by credit card.

Uber, Ola drivers on strike

Cab drivers who had a ball in the early days of Uber and Ola where cash incentives were vast are of late complaining. Naturally enough. Easy money is no longer possible as the aggregators have begun to cut cost to improve the bottom line. Targets for drivers are stiffer than what they were before and incentives are smaller than in the past. Bonuses were once based on the number of rides clocked in a day (this encouraged drivers to take short trips). Bonus is now linked to daily collections (this supports longer trips) of the driver. Some drivers complain that this makes them earn lower than government tariff. But quite a bit of them who once made Rs 125,000 a month, today make about Rs100,000 but by working over 18 hours a day. Also, these companies are reported to have violated transport regulations in India and have refused to take ownership when delinquent drivers play around with customers. The defence being that they are not their employees.

Globally, the aggregator service has increased the IT hardware, software and service spending. It has also increased the market for Mobile Wallet companies. The cab aggregator rides have surged approximately 280 per cent in 2016. The cab aggregating service in India has paved the way to a new habit amongst the population. Whether the industry is here to stay or collapse over time will depend largely on the customer loyalty and the acceptance of the mechanism.

IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.